NORTH AMERICA – Four of the five pension funds in New York City have voted to invest $500m (€380m) into rebuilding efforts in areas affected by Superstorm Sandy.
This capital will be combined with leverage to give it $1.5bn of total capitalisation to invest in the real estate market.
There is the potential of 3,000 housing units and 150,000-200,000 square feet of commercial space to be developed or redeveloped.
New York City comptroller John Liu said: "The rebuilding programme will become the bricks and mortar neighbourhoods need to rebuild from Sandy's wrath.
"This investment demonstrates the steadfast commitment of city employees and retirees to pursue opportunities that are not only expected to deliver strong returns but also to generate collateral benefits for the communities they call home."
The investment efforts will be led and managed by the Related Companies and The Hudson Companies in newly formed partnerships.
The Comptroller's office stated in an email that the projected net IRRs for the two managers were 9-12% for Related and 12-14% for Hudson.
The pension funds that have approved the investments are the New York City Employees' Retirement System, the Teachers' Retirement System, the New York City Police Pension Fund and the Board of Education Retirement System.
The New York City Fire Department Pension Fund is planning to have a board meeting next week and is anticipated to approve the investment as well.
Related Companies has been awarded $300m of equity for the programme, investing $10m of its own capital as well.
Its capital will focus on the renovation and reconstruction of housing damaged or destroyed by Sandy.
Hudson has been allocated $200m of equity, which will be split into two different redevelopment efforts.
Around 80% of the capital will be used to create affordable and market-rate housing in coastal areas A, B, and C that were impacted by Sandy.
The other 20% will be invested in retail properties.
According to the Comptroller's office, this will involve the development or re-development of standalone neighbourhood retail centres or the enhancement of existing retail corridors.
Hudson will be investing $8m of its own capital in the programme.
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